Question

1. Explain the conceptual differences between the 3 social welfare functions that we discussed? What do they place different weight on?
2. Explain the difference between market failure and government failure and how one’s beliefs on them may impact what one believes the role of government should be in an economy.
3. Is majority rules voting efficient? Explain why or why not.

Answer 1

Social welfare functions in well-being economics and social choice theory for the comparative evaluation of social unorthodox . With a social well being function , social preferences depend on individual welfare . The three dominant slants of welfare functions are , Bergson - samuelson social welfare functions , Arrovian social welfare functions and sen's social welfare functions .

Different social welfare functions have different works and ideas about , how the measurability and equivalencibility of utility can be modeled and how limitations on the types of utility comparisions that are feasible limit kinds of social welfare functions . Use of Bengson - sumuelson social welfare function has flourished independently of the theoretical debate about their existence , Arrovian social welfare function assigns a social preference ordering to each admissible profile of individual preference ordering of a set of alternatives . Sen's social welfare function is intended to express a statement of objectives of society .

Markets fail when it is possible to make one person better off without making another person worse off , this designate inefficiency . But the Governments fail when an interpretation is unwarranted because markets are performing well or when the interpretation fails to correct a market problem efficiently .

Governments provide the licit and social framework , gives services and public goods , maintain competitions , reallocation income , correct for externalities and stabilize the economy .

Majority rule is a resolution rule that selects substitutes which have a majority, that is more than half of the votes . It is the binary resolution rule used most often in authoritative decision-making bodies , including all the legislatures of democratic nations.